I have loaned money to a friend at interest. This friend has irregular income and is frequently short of money. This friend currently has about $3000 in loans from me and I have a contract saying that it will be returned with interest. Of course, I would not try to enforce the contract through the legal system, although if he died suddenly I might try to get a check from the life insurance company.
This is one of the reasons I started the thread, because of wondering about the ethics of this kind of situation. If I hadn't loaned him the money, perhaps he would have been evicted. If I don't charge interest, I feel shorted because I could have put that money into investments that would have earned me a return. Right now I could really use that $3000 to invest in my business.
But after reading some of the replies I feel at least a little justified that at least I am loaning him money that I actually have rather than money-created-out-of-thin-air like the banks do.
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